Summit Venture

Chapter 1

Your situation

Why a high professional income creates a different kind of planning problem

Most financial content is written for people trying to earn more. Your challenge is usually different: what happens to income after it arrives, how much of it you keep, and how concentrated your financial life is in a single career.

Tax	The top rates arrive early and stack	Federal, Medicare and state taxes can all apply to the same marginal dollar of earned income.
Tax-advantaged space	The standard tools fill up quickly	Retirement and health accounts are often maxed early in the year. The rest lands in taxable accounts.
Concentration	Your career is your largest asset	Your future earnings tie most of your wealth to one profession, often one practice.
Time	Attention is the scarcest resource	Anything you own should be judged partly on the time it asks of you.

How you are paid matters

The same deduction can work very differently depending on how your income is earned

Before looking at any asset, it helps to know which of these describes you. The distinction shapes how the tax rules later on this page apply.

Employed (W-2 salary)

Hospital-employed physicians, in-house counsel, associate dentists

Your income arrives as wages with tax withheld at source. For planning purposes, wages have one important feature: under the excess business loss rules, they are not treated as business income. That means a large business deduction in a single year can only offset your wages up to an annual, inflation-adjusted threshold. Anything above it carries forward to future years as a net operating loss rather than disappearing.

This does not make direct ownership unsuitable. It means the size and timing of any deduction should be modeled against your actual numbers, not assumed.

Questions for your CPA
What is my excess business loss threshold this year, and how much of a projected deduction would I use now versus carry forward?
Would the alternative minimum tax change the picture for me?
How does my state treat intangible drilling costs and depletion?

Partner or shareholder (K-1)

Law firm partners, physicians in group practices, shareholder dentists

Your income flows through a partnership or S corporation and is reported to you on a Schedule K-1. Because it already comes from a trade or business, it generally counts on the business income side of the excess business loss calculation, which can let more of a business deduction be used in the year it arises.

Firm and practice structures vary widely, including state-level pass-through entity tax elections. The interaction between your firm's reporting and any outside business activity is something your CPA should confirm rather than assume.

Questions for your CPA
How is my K-1 income characterized for the excess business loss calculation?
Does my firm's pass-through entity tax election affect my personal planning?
Are there partnership agreement restrictions on outside business activities I should check?

Practice owner

Private practice owners in medicine, dentistry and law

You likely pay yourself a salary plus distributions, and your practice competes for the same capital as everything else: equipment, expansion, associate buy-ins, a second location. For many owners, the practice itself is the highest-conviction use of capital available, and it deserves first claim.

Outside assets make sense once the practice is adequately capitalized and you want to reduce how much of your net worth depends on a single business in a single location.

Questions for your CPA
Is my practice fully capitalized for the next three to five years?
How would an outside business deduction interact with my salary and distribution mix?
Would it matter whether I hold an outside interest personally or through an entity?

Chapter 2

Capital roles

Before energy: what each part of your capital is for

No single asset does every job. A useful way to think about a balance sheet is to assign each part of it a purpose, then judge each asset only against that purpose. Select a layer to see what it does and what it gives up.

Reserves

Cash, Treasury bills, money market funds

The money that has to be there no matter what happens in markets.

Its job Cover emergencies, near-term obligations and known large expenses such as a practice buy-in, tuition or a home purchase.
What it gives up Growth. After inflation and tax, cash tends to lose purchasing power over long periods.
Worth asking How many months of spending, plus which known commitments, should this layer cover for me?

Core market holdings

Diversified stock and bond funds, retirement accounts

For most professionals, this is the engine of long-term wealth and should be built first.

Its job Long-horizon growth through broad, low-cost diversification, with daily liquidity and well-understood tax treatment inside and outside retirement accounts.
What it gives up Control and certainty. Prices move with markets, and in a sharp decline most holdings tend to fall together.
Worth asking Am I using every tax-advantaged account available to me, and is this layer diversified away from my own industry?

Real assets and private holdings

Real estate, private funds, business interests

Assets whose value is tied to something physical or to a private business rather than a stock price.

Its job Income that is linked to real activity, potential inflation sensitivity, and exposure that does not move in lockstep with public markets.
What it gives up Liquidity and simplicity. These assets can take months or years to sell, require more diligence, and often carry higher minimums.
Worth asking How much of my net worth can I comfortably leave untouched for five years or more?

Direct operating ownership

Including working interests in oil and gas wells

Owning a share of an operating business directly, with its costs, decisions and outcomes. A direct working interest in oil and gas wells sits here.

Its job Participation in the economics of a real operation, including tax attributes that flow directly to owners, and exposure to a sector that behaves differently from your career income.
What it gives up Liquidity, limited liability and predictability. Outcomes vary widely by project, and for many professionals the right amount in this layer is zero.
Worth asking If this capital were lost entirely, would my plans change? If yes, this layer is premature.

Layer widths are illustrative, not a recommended allocation. The right mix depends on your circumstances and should be set with your own advisers.

Chapter 3

Ways to own energy

Four ways to hold energy exposure, and what each actually gives you

Oil and gas can enter a portfolio in several forms. They differ in what you own, what you pay for, what you can sell and which tax rules apply. Knowing the differences is the fastest way to evaluate any offer you receive.

Attribute	Public energy stocks & fundsExchange-traded	Mineral & royalty interestsShare of revenue	Limited partnership programsPooled, sponsor-managed	Direct working interestHow Summit JVs are structured
What you hold	Shares in a company or fund that owns energy assets	A right to a share of production revenue, free of drilling and operating costs	Units in a partnership that holds interests on your behalf	A direct share of specific wells, their costs and their revenue
Your share of costs	None directly	None	Borne inside the program	Proportional to your interest, including overruns
Liquidity	Daily, on an exchange	Limited; usually a private sale	Limited; often none until the program winds down	Limited; generally held for several years
Tax attributes that reach you	Dividends and capital gains	Depletion on royalty income	Drilling deductions and depletion, generally usable only against similar income	Drilling deductions, depreciation and depletion, subject to the limits in Chapter 4
Can deductions offset salary or practice income?	No	Not applicable	Generally no	Potentially, under the working-interest rule
Liability	Limited to what you put in	Limited	Limited for limited partners	Not limited in the same way; this is the tradeoff that enables the tax treatment
Your role	None	None	Limited partner with few decisions	JV member with governance rights and participation in material decisions
Eligibility	Open to anyone	Varies	Often limited to accredited individuals	Accredited individuals, verified before any commitment

Working interest The ownership share that carries the right to develop and produce a property, and the obligation to pay a proportional share of the costs of doing so. Working-interest owners receive their share of revenue after royalties are paid, and they bear their share of the expenses and the outcomes.
Royalty interest A share of production revenue, usually retained by the mineral owner, that is paid before costs and carries no obligation to fund drilling or operations. Simpler and lower in cost exposure, but royalty owners have no say in development and do not receive drilling-related deductions.

Chapter 4

Tax mechanics

The tax mechanics, explained without the shortcuts

Tax treatment is often why professionals first hear about oil and gas. It is also where most misunderstandings start. Here is how the core rules work, followed by the limits that matter most at your income level.

IRC §263(c)	Intangible drilling costs (IDCs)	Labor, fuel and drilling services can be deducted in the year they are incurred. On a new well, they are typically a large share of the cost.
Depreciation	Tangible drilling and equipment costs	Casing, wellheads and tanks are capitalized and depreciated over time. Accelerated depreciation may apply.
IRC §613A	Percentage depletion	Once a well produces, qualifying owners may deduct 15% of gross income from the property each year.
IRC §469(c)(3)	The working-interest rule	Working interests held without limited liability are exempt from the usual loss limits, so deductions may offset salary or practice income.

Summit focuses on redeveloping proven fields, which can combine new drilling, work on existing wells and acquisitions of producing assets. Select a project type to see which attributes typically matter most. This is a qualitative guide, not a projection.

New drilling

Intangible drilling costs	3	Typically significant	Most spending on a new well is drilling-related.
Equipment depreciation	2	Can be meaningful	Casing, wellheads and surface equipment are capitalized.
Depletion	2	Once producing	Begins only after the well produces.
Early production income	1	Delayed	Revenue waits for drilling and completion.

Work on existing wells

Intangible drilling costs	2	Depends on the work	Recompletions and new zones can generate IDCs; routine repairs are treated differently.
Equipment depreciation	2	Can be meaningful	New pumping or surface equipment is capitalized.
Depletion	3	Typically significant	Wells are already producing, so depletion applies.
Early production income	2	Existing plus added	Existing production continues while new work comes online.

Acquiring producing wells

Intangible drilling costs	1	Usually limited	The drilling already happened; little of the price is drilling cost.
Equipment depreciation	2	Can be meaningful	Part of the price may be allocated to equipment.
Depletion	3	Typically significant	Much of the price is recovered through depletion.
Early production income	3	From acquisition	Production is already flowing at purchase.

The limits that matter at your income

Where the headline benefits get smaller

These are the rules most often left out of oil and gas marketing, and the ones most relevant to high earners. Each is a reason to have your CPA model a specific project against your actual numbers.

Excess business loss limit Caps how much business loss can offset wages each year. The excess carries forward.
Alternative minimum tax Drilling costs can be an AMT preference item, depending on your wider tax picture.
Recapture on sale Some deductions are taxed back as ordinary income when an interest is sold.
State conformity Not every state follows the federal treatment.
Retirement accounts Inside an IRA the deductions are largely wasted and can trigger unrelated business income tax.
Laws change The project should still make sense if the tax treatment became less favorable.

Chapter 5

What you take on

What a JV member takes on

Direct ownership means sharing in the operational risk of a real business. These considerations deserve as much attention as the tax treatment.

Commodity prices you do not control A well can perform as planned and still earn less if prices fall.
Wells that perform differently than modeled Reserve estimates are engineering judgments, not certainties.
Additional costs Owners pay their share of costs, including overruns and repairs.
Illiquidity There is no public market. Plan for capital to stay committed for years.
Liability exposure The tax treatment depends on liability not being limited. Review it with your attorney.
Tax outcomes that can change Deductions can be limited, recaptured or changed by new legislation.
Concentration and sponsor risk One project or operator concentrates your exposure. Sponsor quality matters.
Environmental and regulatory change Evolving regulation can affect costs and timelines.

Can oil and gas deductions offset my salary or practice income?

Potentially, with limits. Under the working-interest rule in Section 469(c)(3) of the Internal Revenue Code, deductions from a working interest held without limited liability are not restricted to offsetting similar income, so they may offset wages or practice income. For salaried professionals, the excess business loss limit then caps how much net business loss can offset wages in a single year, and the excess carries forward. Your CPA should model the specifics before you commit.

How is this different from a real estate syndication?

Both are private and illiquid, but the tax rules differ. Losses from rental real estate are generally restricted to offsetting similar income unless you qualify as a real estate professional, which most full-time physicians, dentists and attorneys do not. A working interest held without limited liability is carved out of that restriction. The economics also differ: oil and gas reserves deplete as they are produced, and revenue moves with commodity prices.

Is JV membership something I can hold without being involved?

No. Summit structures its ventures as entrepreneurial joint ventures, and JV members hold governance rights and take part in material decisions. The time involved is far less than running a practice, but participation is real and expected. Summit can walk you through what membership involves on a current project.

Do I qualify?

Participation is limited to individuals and entities that are accredited under SEC Rule 501. For individuals, the common tests are income above $200,000, or $300,000 together with a spouse or spousal equivalent, in each of the past two years with a reasonable expectation of the same this year, or a net worth above $1 million excluding your primary residence. Because Summit relies on Rule 506(c), it takes reasonable steps to verify status before any commitment. Minimum commitment amounts are set out in each offering's documents.

How long would my capital be committed?

Treat it as committed for several years. There is no public market for a working interest, and an exit on a particular timeline cannot be assumed. Summit's Exit Right discipline reviews each asset continuously to decide whether to hold, optimize or exit, but the timing depends on performance and market conditions.

Can I use my IRA or 401(k)?

Some energy interests can be held in a self-directed IRA, but a working interest inside a retirement account usually defeats its purpose. The account does not pay current tax, so the deductions are wasted, and working-interest income can be subject to unrelated business income tax inside the IRA. Most professionals evaluate direct ownership with taxable capital. Discuss this with your CPA.

I have asset-protection planning in place. What about liability?

It is the right question to ask. The working-interest rule depends on your liability not being limited in the way a limited partner's is. Ask Summit what insurance covers operations and how the venture is structured, and review both with your own attorney before committing.

What will my CPA need from Summit?

Typically the expected split of costs between drilling, equipment and acquisition, the expected timing of funding, how the venture reports to members for tax purposes, and the states where the properties are located. Summit can provide project-level information on request so your CPA can model it against your own filing.

Top-Bracket Income. Maxed-Out Accounts. Now What?